According to the memory of people, the town was founded in 15th century. The big Turkish fleet sailed into the Adriatic sea to rob and plunder rich seaside towns, especially those one in Boka. One day, when the weather was bad, that fleet sailed into Jaz beach, a place into bottom of Grbaljsko field, near Kotor. Guards were left on the galleys, which were anchored or grounded on sand, while the rest of Turkish soldiers set off for Kotor, across Grbaljsko field, to attack and devastate it from the land.When Pastrovics heard about this, they quickly gathered their soldiers and went to Kotor by shortcut to attack Turks and help Kotorans in defense of their town. After the victory, on their way back, they attacked Turkish galleys at the beach Jaz. With God's help they managed to kill the rest of Turkish crew and took the conquered galleys to Drobni Pijesak - the beach and the valley where they used to anchored their fisherman's boats and ships - to unload the war trophies there.
Pastrovics have decided not only to divide the rich war trophies but to build a fortress on the rocky island near the coast as well as houses for each of Pastrovic's 12 tribes, and the church decided to St. Stefan the protector of Pastrovics. The fort was made to serve defense against Turks, pirates and other enemies as well as an asylum and shelter: asylum for women, children and old people during the time of enemy's attacts and shelter for food and groceries: corn, oil, vine, meat, honey and others. They drowned the conquered Turkish galleys leaving no trace of them.
This folktale finds confirmation in written documents where St. Stefan was mentioned for the first time(1442)as an advanced guard house. It is also written that the fort was built earlier and called St. Stefan after the church with the same name constructed at the same time when the settlement in the fort was built.
In ancient documents Sveti Stefan is mentioned by the name of “place of justice” - the pivotal place of Pastrovics township and tribe. This name originated from the fact that the court “Bankada” had been sessioning in it for 400 years. It was usually done at Pjaca, a space in front of the entering gate. Tribal disputes and misunderstandings were solved at that spot until 1929.
Fortress Sveti Stefan achieved a grand rise in the first half of XIX century when it counted 100 houses, three churches, and 400 inhabitants on its small space limited by the sea and the walls. There was no space for more.
At the beginning of XX century it suddenly lost its economic power and political importance. The inhabitants left it. The best men went to war and many more emigrated to America. In 1912 there were 150 inhabitants, and in 1954 only 20.
A group of smart architects and artists began adaptation of abandoned houses in 1954 with help of the communist power who removed the left 20 inhabitants to the land, and as early as 1957 they turned them into an unique town - hotel - the most attractive and the most luxurious hotel complex at the Adriatic and the Mediterranean, intended for tourism of the highest level. Adaptation was done expertly and heatedly so the buildings from outside look exactly as they were before, while the inside spaces were richly decorated and turned into luxurious apartments.
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